As recently as two years ago, T-Mobile had all but been given up for dead. It was losing subscribers and struggling to upgrade its aging cellular network.
Its owner, Deutsche Telekom, said it wanted out of the competitive North American market, agreed to sell T-Mobile to AT&T for $39 billion and was already describing T-Mobile as a “discontinued” operation in its financial statements. In lobbying the government to approve the merger, AT&T warned ominously that a stand-alone T-Mobile would probably fail and consumers would suffer.
But AT&T failed to reckon with the likes of John J. Legere.
Legere, 55, was named chief executive of T-Mobile in September 2012, after the antitrust division of the Justice Department sued to block the proposed AT&T merger and AT&T threw in the towel.
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As a former chief executive of Global Crossing during the fiber-optic network company’s trip through bankruptcy and re-emergence as a public company, he had experience with difficult turnarounds. But nothing on his résumé quite prepared anyone for the Legere who emerged at the helm of T-Mobile.
He dumped suits and ties in favor of hot pink T-shirts emblazoned with the T-Mobile logo, which he often wore under a black leather motorcycle jacket with jeans and sneakers. Gone was the corporate slicked-back hair: His modishly long hair now grazed his collar.
Legere not only looked but also acted the part of the “disruptive” competitor beloved by antitrust regulators but all too rare in most concentrated industries (there are just four major cellular carriers). He branded T-Mobile the “Un-carrier” and took square aim at the staid giants of the industry, AT&T and Verizon, publicly describing them with language that can’t be printed in this newspaper.
This might have been dismissed as little more than a colorful stunt, given the depth of T-Mobile’s problems.
But then the results started rolling in. Earlier this month, T-Mobile announced that it had added more than 600,000 wireless contract subscribers, its second straight quarter of subscriber growth.
Its upgraded nationwide 4G LTE network was reaching more than 200 million users. And although still operating at a modest loss, revenue was up 9 percent. After going public in May at $16.38 a share, T-Mobile US shares have surged this week to more than $26, a gain of 62 percent.
“It’s not just coloration,” said Albert A. Foer, a lawyer and president of the American Antitrust Institute, who lobbied fiercely against the AT&T merger. “Some personalities are just disruptive. A disruptive-type CEO can bring a company a long way in the right circumstances. That’s what Legere seems to be doing here.”
A wireless-industry analyst, Jeff Kagan, agreed: “The T-Mobile of today seems to be a different company than the one we saw lying on its deathbed just a few short years ago. Legere is the reason. He is punching their way back onto the map.”
How did he do it?
Pinning down the peripatetic Legere for an interview wasn’t easy — a divorced father of two grown daughters, he works seven days a week, travels constantly and spends evenings listening in on customer conversations at call centers. He jumped in on one of those and persuaded a customer to switch from AT&T.
He blasts out emails and provocative Twitter posts.
“The difference between us and them? We have to work to keep you. They trap you and forget about you. … Until your contract is almost up,” he recently tweeted.
But he took a break to share some of his strategies and insights.
The Legere of the hot pink T-shirts and modish hair? That, he said, is “the real me. I’m totally comfortable with it.”
He said his father wore conservative Brooks Brothers suits and button-down shirts, which he emulated earlier in his career.
But now he has reverted to the jeans and longer hair of his college days, when he was a cross-country star at the University of Massachusetts.
In advance of a meeting in Washington, D.C., with members of Congress earlier this month, he said he would be wearing his signature T-shirt.
“I may tone down the sneakers a little bit and wear a suit over it,” he said.
Beneath the clothes is a fierce competitor who still runs marathons (including this year’s in Boston) and seems to enjoy nothing more than denouncing AT&T and Verizon, which he refers to as a “pseudo duopoly.” (He doesn’t think Sprint is even worth mentioning, though there are new reports Sprint and Dish Network may bid on T-Mobile next year. )
When he joined T-Mobile, “We had a limited time window and a sense of urgency,” Legere said.
“We were losing over 2 million customers a year. So we moved as fast as we humanly could. My board wondered if we were doing too much. But the fact is, speed has become one of our biggest weapons. The current industry is arrogant, stupid and slow, which gives companies like T-Mobile a real competitive advantage.”
Although the task of reviving T-Mobile seemed daunting, “I felt that as a challenger, we might just have a pretty amazing opportunity in front of us,” he continued. “We could take a completely different approach to this business, we could create real customer value by driving serious change in this ridiculous and broken industry.”
That meant upending long-entrenched industry practices, addressing what Legere calls customer “pain points.”
T-Mobile got rid of the much-reviled two-year contract and let customers pay for their phones and service separately. If they don’t like their T-Mobile service, they can change carriers any time once their phones are paid for.
T-Mobile cut prices, with free unlimited overseas roaming. Armed with a war chest and additional spectrum that it got as a breakup fee after the AT&T deal failed, T-Mobile expanded and modernized its 4G LTE network, now available to 205 million people.
A few weeks ago T-Mobile roiled the industry again when it offered free unlimited data for tablets.
Representatives of AT&T and Verizon declined to comment.
T-Mobile branded and marketed all this as the “Un-carrier,” rolling out new versions of its plans — already five and counting — even as competitors have struggled to match the previous one.
“Surprise is an effective competitive tactic,” Legere said. “When you catch the competition by surprise, keep punching and don’t let them up. When you have momentum, keep building it by delivering unexpected offers in rapid succession. Our team is loving it. They are breaking the boundaries and getting to use all their creativity. That’s pretty cool.”
Another group loving it is antitrust regulators. T-Mobile’s success has enabled the Justice Department’s antitrust division to take a rare victory lap, since the company’s consumer-friendly moves are exactly what regulators hoped for when they sued to block the merger with AT&T.
“This really demonstrates that competition can work,” said William J. Baer, the division’s head.
Whether T-Mobile can sustain the momentum remains to be seen, and Legere concedes the battle is far from over.
“We run scared every day,” he said. “We know we have a lot to do yet. But look at the choices customers are making. In the last two quarters, since we launched Un-carrier, T-Mobile has grown faster than everyone else, and we have added more postpaid customers than Sprint, AT&T and Verizon combined. I really think that says it all.”